American Eagle forecasts sales decline amid challenging retail environment
American Eagle store Credits: American Eagle Outfitters Apparel retailer American Eagle anticipates a challenging year ahead, forecasting mid-single-digit sales declines for the current quarter, diverging from analysts' expectations of marginal growth. Full-year projections also point to a low single-digit sales decrease, falling short of consensus estimates. During an analyst call, finance chief Michael Mathias detailed that while Aerie sales are expected to remain positive throughout the year, a more pronounced decline in American Eagle sales will offset this growth. For the preceding holiday quarter, the company’s comparable sales increased 3 percent but net revenue of 1.6 billion dollars declined 4 percent. Aerie comparable sales increased 6 percent and American Eagle comparable sales grew 1 percent versus the same quarter last year. Acknowledging the prevailing low consumer sentiment, CEO Jay Schottenstein stated, "The first quarter of 2025 has commenced with a slower pace than anticipated, reflecting subdued demand and colder weather." He added, "While we foresee improvements as the spring season progresses, we are implementing proactive measures to bolster top-line performance, manage inventory effectively, and reduce expenses. As we navigate the uncertain consumer and operational environment, we will remain steadfast in our long-term strategic priorities." Further impacting the company's financial outlook, Mathias highlighted the anticipated effects of tariffs. “The company currently sources just under 20 percent of its products from China and is expecting a 5 million dollars to 10 million dollars hit from the new duties in fiscal 2025, which will also affect American Eagle’s gross margin,” Mathias explained during the call. “At the moment, the company isn’t planning on passing those costs on to the consumer and is working to get its China exposure down to under 10 percent by the end of the fiscal year,” he added.
Apparel retailer American Eagle anticipates a challenging year ahead, forecasting mid-single-digit sales declines for the current quarter, diverging from analysts' expectations of marginal growth. Full-year projections also point to a low single-digit sales decrease, falling short of consensus estimates.
During an analyst call, finance chief Michael Mathias detailed that while Aerie sales are expected to remain positive throughout the year, a more pronounced decline in American Eagle sales will offset this growth.
For the preceding holiday quarter, the company’s comparable sales increased 3 percent but net revenue of 1.6 billion dollars declined 4 percent. Aerie comparable sales increased 6 percent and American Eagle comparable sales grew 1 percent versus the same quarter last year.
Acknowledging the prevailing low consumer sentiment, CEO Jay Schottenstein stated, "The first quarter of 2025 has commenced with a slower pace than anticipated, reflecting subdued demand and colder weather."
He added, "While we foresee improvements as the spring season progresses, we are implementing proactive measures to bolster top-line performance, manage inventory effectively, and reduce expenses. As we navigate the uncertain consumer and operational environment, we will remain steadfast in our long-term strategic priorities."
Further impacting the company's financial outlook, Mathias highlighted the anticipated effects of tariffs. “The company currently sources just under 20 percent of its products from China and is expecting a 5 million dollars to 10 million dollars hit from the new duties in fiscal 2025, which will also affect American Eagle’s gross margin,” Mathias explained during the call.
“At the moment, the company isn’t planning on passing those costs on to the consumer and is working to get its China exposure down to under 10 percent by the end of the fiscal year,” he added.
